Toyota will build the new model of its Auris car in the newly revamped factory in Burnaston in Derbyshire, in a major vote of confidence in the UK.

The new model will start rolling off production lines before the end of this year. The factory typically made around 140,000 of the previous Auris models per year.

It comes after the company invested more than £240m in new technology and systems to build the next generation of Toyota vehicles and make the plant more competitive.

The group’s president and chief executive, Johan van Zyl, said Toyota needs to keep access to the EU’s markets, which is vital for components in the cars and also as an export market.

“As a company, we are doing what we can to secure the competitiveness of our UK operations as a leading manufacturing centre for our European business,” he said on a visit to the factory.

“With around 85pc of our UK vehicle production exported to European markets, continued free and frictionless trade between the UK and Europe will be vital for future success.”

He was speaking ahead of a report from the Business, Energy and Industrial Strategy (BEIS) Committee of MPs which concluded that it is important for the car industry that Brexit brings as few changes as possible.

Avoiding tariffs is imperative, the MPs said.

“It is difficult to see how it would make economic sense for multinational volume manufacturers – the bulk of the UK automotive sector – to base production in the UK in a no deal or World Trade Organisation tariff scenario,” the MPs said.

“The shift of manufacturing to countries within the customs union and single market would be inevitable; the cost in UK jobs could be in the hundreds of thousands, and inward investment in the hundreds of millions.”

The UK is currently within the EU’s tariff walls which impose a 10pc tax on imports – so leaving this could place British factories at a disadvantage when selling into the EU, though trade deals could stop this from happening, and also open up the UK to more global trade.

Delays at the border for inspections would “make the UK automotive sector less efficient and act as a disincentive to international companies looking for a base to manufacture cars for the European market”.

British regulations should continue to match those in the EU as “the UK market is not big enough to warrant the additional costs to manufacturers of meeting another set of standards”, said the Committee which is chaired by Labour MP Rachel Reeves.

Instead the UK should continue to contribute to the pattern of convergence in regulations globally, which gives manufacturers more scale and allows them to become more efficient.

Meanwhile Australia’s High Commissioner to the UK told parliamentarians that the removal of trade barriers can be a shock to industries as they open up factories to global competition.

"It [trade liberalisation] hasn’t always had widespread public support. There have been reservations about the trade liberalisation agenda in particular amongst people working in industries which have been directly affected by reductions in tariffs and quotas over the years,” Alexander Downer told the International Trade Committee.

As trade barriers were removed Australian factories found themselves uncompetitive, and the last car built in South Australia rolled off the production lines last year.

But overall, he said, free trade has been a boon to Australians.

"We didn’t seek to protect any sectors [in the free trade agreement with the US],” he said.

“It’s worked a treat. I’m happy to explain why this is a huge success.

"94pc of our exports go to the US completely duty free, 100pc of their exports come to Australia completely duty free. That turns out to be not only good for the macro economy, but it is particularly beneficial for low income people."